More than a million pensioners will still have a mortgage within the next five
years, experts have warned.

There are already almost 250,000 people aged over 65 who are repaying mortgages. Figures disclosed that a further one million home owners approaching retirement had yet to clear their mortgage debts.

Experts said that within five years, the number of pensioners with mortgages would rise to more than one million.

The trend was expected to lead to many pensioners facing financial hardship as they struggled to pay off debts from the dwindling value of their pensions. Share prices and savings rates fell during the credit crunch, leaving many pensioners without the money to pay off their home loans.

Ros Altmann, the director general of the Saga Group, said: “It is not going to take very long to get to a million pensioners with a mortgage.

“A lot of pensioners are relying on endowment policies or lump sums from their pensions to pay back their mortgage debt. But these things have just not worked out.”

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Melanie Bien, of Private Finance, the mortgage broker, said: “While most of us hope to pay our mortgage off long before we retire, an increasing number of home owners simply can’t afford to.

“Instead, they are continuing with their mortgage well into retirement, using their bricks and mortar to raise cash to live on, and to help their children and grandchildren with their own property purchases.”

The latest figures, published by the Department for Communities and Local Government, disclosed that almost 249,000 people over state pension age had a home loan. A further 1,071,000 people aged between 55 and 64 still had mortgage debts.

A study by the Council for Mortgage Lenders suggested that more than half of all home owners aged over 50 — many of whom retired early — had mortgage terms that stretched beyond the age of 65, and that two-thirds said they intended to remain in debt indefinitely.

Charities expressed concern about pensioners in debt, saying they would be among the worst hit if interest rates rose.

Malcolm Tyndall, a director at Elizabeth Finn Care, said: “Faced with greater difficulty in re-entering the workplace, pensioners will naturally use up their savings, with many forced to rely on other methods of payment such as credit cards and high-interest loans. If interest rates rise causing higher mortgage payments, older people are going to suffer disproportionately.

“There is a preconceived image that it’s people of working age who are falling into debt, but we are seeing more people in their later years falling into debt who are often more reluctant to ask for help because of the stigma attached to it.”